can i add music to my icloud if not purchased from apple

I have purchased a new ipod touch 32gb 5th generation and I am having trouble installing the device. I have an old version of itunes at the moment. Do I need to upgrade to the new version in order for this to link.

Also i have managed to save all my itunes music in a folder on my laptop. How can i transer these items into icloud as alot of the music is not from Apple.

Thank you